Actually it does play 16-bit Flac files quite happily, and aiff files as well, and they sound glorious; even giving my 15 year old Meridian CD player a run for its money. Compressed files can sound, well, compressed. Although hi-bit rate (320k) internet radio stations do sound better.
It will apparently play higher bit-rate files as well if streamed directly from a computer through the ethernet port, although I've not tested this yet, and whether the computer needs to be plugged directly into the unit or via a wired network isn't yet clear.
Basically if a file can be played on Windows Media player 12, it can be played through the Rotel.
FLAC omission is surprising.
just incomprehensible ...
I agree, that omission instantly wipes it off the shortlist.
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